How austerity in Greece is threatening the euro zone again

A coalition of radical leftist parties seem poised to take power in Greece. Could the troubled country really leave the euro zone?

Kostas Tsironis/Bloomberg/Getty Images

Kostas Tsironis/Bloomberg/Getty Images

After decades of government from the centre-left or centre-right, Greece may soon be led by a party of self-described radical leftists headed by a 40-year-old former student leader who named his son after the Marxist revolutionary Che Guevara.

The Greek financial crisis, and austerity measures demanded by the European Commission, the European Central Bank and the International Monetary Fund in exchange for $330 billion in bailout loans, have battered ordinary Greeks over the past five years. Pensions have evaporated, salaries shrunk and unemployment levels persist well above 20 per cent. The austerity measures were meant to bolster Greece’s economy, which was floundering due to structural deficits and runaway debt. But Many Greeks are angry at Europe for imposing the measures on them, and at their own politicians for agreeing to austerity in the first place. “It’s led to poverty, it’s led to people having to scramble to make a living, people being destitute, looking in rubbish bins for scraps of food,” says Spyros Economides, an associate professor of international relations at the London School of Economics and Political Science. “It’s led to social tensions, an inability to buy medical care, everything,”

This frustration has helped to catapult the Coalition of the Radical Left, known more commonly by its acronym, SYRIZA, into a dominant position in Greek politics. It’s risen from near-fringe party status five years ago to now consistently polling ahead of its nearest competitor, Prime Minister Antonis Samaras’s conservative New Democracy party. A SYRIZA victory in parliamentary elections on Jan. 25 would upend Greece’s ossified political landscape and potentially change its relationship with other countries sharing the common euro currency.

SYRIZA’s leader, Alexis Tsipras, is a youthful populist who “came up through the bear pit of Greek student politics” and has spent his entire adult life since then as a politician, says Economides. Once a young communist, Tsipras delivers energetic speeches that reflect the frustration and wounded pride of many Greeks. In a public address last year, he railed against German Chancellor Angela Merkel and German Finance Minister Wolfgang Schäuble—blamed because of Germany’s position as the economic powerhouse of a eurozone that demanded austerity of Greece. “Go back,” he told them, his left fist rising and falling rhythmically as he spoke. “Greece is not a guinea pig and we won’t let you turn our country into a banana republic, and the Greek people into cheap, uninsured, disposable and muzzled masses.”

The speech, delivered shortly after a visit to Greece by Merkel, came as Greece’s economy began showing sputtering signs of life and the country was able to borrow from bond markets for the first time in four years. But these are pinpricks of light in what remains a deep gloom. “Try to think of the crisis in Greece today as the Great Depression of 1929,” says Dimitri Sotiropoulos, an associate professor of political science at the University of Athens. “This is the size of the phenomenon we encounter here.” Under such circumstances, any governing party would lose credibility among voters, he says. The current government is a coalition that includes New Democracy and the left-leaning Panhellenic Socialist Movement (PASOK).

Indeed, SYRIZA’s rise comes amid a broader polarization in Greek politics. There has been “almost a destruction of the middle space,” says Othon Anastasakis, director of the European Studies Centre at the University of Oxford’s Saint Antony’s College. “Society is divided.” In addition to the rise of SYRIZA, Golden Dawn, a neo-fascist party, has thrived during Greece’s economic troubles. Even with several of its top members jailed or under house arrest, it is polling over five per cent.

Ayhan Mehmet/Anadolu Agency/Getty Images

Ayhan Mehmet/Anadolu Agency/Getty Images

Anastasakis says the political divide in Greece today is not as extreme as it was during the civil war almost 70 years ago. Some Greeks who support Golden Dawn do so as a form of protest, he says, and although SYRIZA is much further to the left than PASOK, it is solidly European and democratic. “Given the abysmally disappointing economic figures, you could expect anything, even a collapse of democracy,” says Sotiropoulos, also a senior research fellow at the Hellenic Foundation for European and Foreign Policy. “It’s unbelievable, and it’s to the credit of the Greeks that democracy has survived even such a deep crisis.”

But if Greece’s democracy is safe, some predict its place in the eurozone might not be. SYRIZA has promised to cancel the austerity measures Greece adopted as part of the bailout package and renegotiate its debt obligations. This could trigger a confrontation with Athens’ lenders in Europe and the IMF, potentially resulting in a Greek exit (or “Grexit”) from the eurozone. Prime Minister Samaras is playing up this risk. “We shed blood to take the word ‘Grexit’ away from the mouths of foreigners, and SYRIZA is bringing this word back to their mouths,” he said in a speech late last year.

It seems Samaras is getting help in this campaign from Berlin. By 2012, Merkel had decided Greece must be kept in the eurozone to mitigate the risk of a “contagion” effect that could hasten the departure of other members and threaten the common European currency. This position implied Greece had some leverage, because its exit would hurt Germany and other eurozone members, as well. Now, according to the German news magazine Der Spiegel, Merkel appears willing to accept a Greek exit, and her government is preparing for that possibility. Officially, of course, Berlin’s policy hasn’t changed: It wants to keep the eurozone intact. But it’s hard to read the unnamed “German officials” who spoke to Der Spiegel and not conclude that Germany wanted to send a message to SYRIZA that Berlin will call its bluff if Athens demands onerous concessions or scuttles austerity.

Tsipras publicly scoffs at the possibility that Greece will be forced to leave the eurozone. “We are through with the possibility of a Grexit, and there is only a Samaras-exit,” he has said—a nifty bit of sloganeering that has failed to soothe the nerves of Greeks who worry a SYRIZA victory will result in tumult between Greece and its creditors. Tsipras has tried to lessen those fears. The closer he gets to power, the softer his rhetoric has become. Only six months ago, says Economides, it looked like a SYRIZA victory would result in a Grexit. “Now they’ve talked their way out of that corner, and they’re leaving it open that they’ll do their utmost to stay in the eurozone,” he says.



According to Anastasakis, most SYRIZA voters want Greece to stay in the eurozone. And, despite Germany’s studied nonchalance, a Greek exit would be disruptive beyond its borders, as well. “If actors from one or the other side think rationally, they don’t want this to happen,” says Anastasakis. He predicts a SYRIZA-led government will reach some sort of accommodation with lenders.

But problems might arise within SYRIZA. The party, as its name suggests, is an ideological coalition with factions within that are more radical than others. “The question is: What is the balance of power within the party?” says Economides. “Is the allure of power strong enough to keep control of those people who may have a more radical agenda than what Tsipras has right now?”

Sotiropoulos suspects that far-left elements of SYRIZA will be satisfied with rolling back reforms in areas such as universities and public administration, rather than demanding a wholesale rejection of austerity. Another factor that may moderate SYRIZA’s agenda is that it will almost certainly not win an outright majority. It will have to form a coalition, likely with less radical partners.

Even blunted, though, SYRIZA is a once-marginal movement that has pushed its way to the front of Greek politics. It still hasn’t faced the test of governing nationally. And its appeal may fade with a financial recovery and subsequent easing of austerity measures. But that, notes Economides, is “a long way down the road.”

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